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The concept of Management by Objectives (MBO) was first given by Peter Drucker in 1954. It can be defined as a process whereby the employees and the superiors come together to identify common goals, the employees set their goals to be achieved, the standards to be taken as the criteria for measurement of their performance and contribution and deciding the course of action to be followed. The essence of MBO is participative goal setting, choosing course of actions and decision making. An important part of the MBO is the measurement and the comparison of the employees actual performance with the standards set. Ideally, when employees themselves have been involved with the goal setting and the choosing the course of action to be followed by them, they are more likely to fulfill theirresponsibilities. UNIQUE FEATURES AND ADVANTAGES OF MBO The principle behind Management by Objectives (MBO) is to create empowered employees who have clarity of the roles and responsibilities expected from them, understand their objectives to be achieved and thus help in the achievement of organizational as well as personal goals. Some of the important features and advantages of MBO are: Clarity of goals With MBO, came the concept of SMART goals i.e. goals that are: Specific, Measurable, Achievable, Realistic,and Timebound. The goals thus set are clear, motivating and there is a linkage between organizational goals and performance targets of the employees. The focus is on future rather than on past. Goals and standards are set for the performance for the future with periodic reviews and feedback. Motivation Involving employees in the whole process of goal setting and increasing employee empowerment increases employee job satisfaction and commitement. Better communication and Coordination Frequent reviews and interactions betweensuperiors and subordinates helps to maintain harmonious relationships within the enterprise and also solve many problems faced during the period.

MBO Model.



MBO Implementation.

Features of MBO: 1. Management by Objectives is a philosophy or a system, and not merely technique. 2. It emphasizes participative goal setting. 3. It clearly defines each individual responsibility in terms of results. 4. If focuses attention on what must be accomplished (goals0 rather than on how it is to be accomplished. 5. It converts objective needs into personal goals at every level in the organization. 6. It establishes standards or yardsticks (goals) as operation guides and also as basis of performance evaluation. 7. It is a system intentionally directed toward effective and efficient attainment of organizational and personal goals. 8. MBO process (or management by Objective cycle or key elements of management by Objectives or minimum equirements of management by objectives. Disadvantages of MBO: It over-emphasizes the setting of goals over the working of a plan as a driver of outcomes. It underemphasizes the importance of the environment or context in which the goals are set. That context includes everything from the availability and quality of resources, to relative buy-in by leadership and stake-holders. As an example of the influence of management buy-in as a contextual influencer, in a 1991 comprehensive review of thirty years of research on the impact of Management by Objectives, Robert Rodgers and John Hunter concluded that companies whose CEOs demonstrated high commitment to MBO showed, on average, a 56% gain in productivity. Companies with CEOs who showed low commitment only saw a 6% gain in productivity. Companies evaluated their employees by comparing them with the "ideal" employee. Trait appraisal only looks at what employees should be, not at what they should do. It did not address the importance of successfully responding to obstacles and constraints as essential to reaching a goal. Conclusion: The use of MBO needs to be carefully aligned with the culture of the organization. While MBO is not as fashionable as it was before the 'empowerment' fad, it still has its place in management today. The key difference is that rather than 'set' objectives from a cascade process, objectives are discussed and agreed, based upon a more strategic

picture being available to employees. Engagement of employees in the objective setting process is seen as a strategic advantage by many.

Bureaucratic Form According to Max Weber His Six Major Principles

Bureaucracy is the name of an organizational form used by sociologists and organizational design professionals. Bureaucracy has an informal usage, as in "there's too much bureaucracy where I work." This informal usage describes a set of characteristics or attributes such as "red tape" or "inflexibility" that frustrate people who deal with or who work for organizations they perceive as "bureaucratic." In the 1930s Max Weber, a German sociologist, wrote a rationale that described the bureaucratic form as being the ideal way of organizing government agencies. Max Weber's principles spread throughout both public and private sectors. Even though Weber's writings have been widely discredited, the bureaucratic form lives on. Weber noted six major principles. 1. A formal hierarchical structure-Each level controls the level below and is controlled by the level above. A formal hierarchy is the basis of central planning and centralized decision making. 2. Management by rules-Controlling by rules allows decisions made at high levels to be executed consistently by all lower levels. 3. Organization by functional specialty-Work is to be done by specialists, and people are organized into units based on the type of work they do or skills they have. 4. An "up-focused" or "in-focused" mission-If the mission is described as "up-focused," then the organization's purpose is to serve the stockholders, the board, or whatever agency empowered it. If the mission is to serve the organization itself, and those within it, e.g., to produce high profits, to gain market share, or to produce a cash stream, then the mission is described as "in-focused." 5. Purposely impersonal- The idea is to treat all employees equally and customers equally, and not be influenced by individual differences. 6. Employment based on technical qualifications-(There may also be protection from arbitrary dismissal.)The bureaucratic form, according to Parkinson, has another attribute. 7. Predisposition to grow in staff "above the line."-Weber failed to notice this, but C. Northcote Parkinson found it so common that he made it the basis of his humorous "Parkinson's law." Parkinson demonstrated that the management and professional staff tends to grow at predictable rates, almost without regard to what the line organization is doing. The bureaucratic form is so common that most people accept it as the normal way of organizing almost any endeavor. People in bureaucratic organizations generally blame the ugly side effects of bureaucracy on management, or the founders, or the owners, without awareness that the real cause is the organizing form.